Treasury’s advice makes sense

Yesterday, permanent Secretary in the Ministry of Finance , Economic Development and Investment Promotion made a call for corporates to resolve tax disputes through engagement with the Ministry of Finance and ZIMRA rather than rushing to court.

In principle, it reflects a preference for administrative efficiency over prolonged litigation, and an acknowledgment that the tax system functions best when disputes are resolved swiftly, predictably, and with minimal disruption to economic activity.

There is a certain practical logic in Treasury’s call.

The advice makes sense.

Zimbabwe’s fiscal environment is already under strain. The state is in an aggressive revenue mobilisation phase, while corporates, particularly in banking and other formal sectors, are increasingly contesting assessments they view as inconsistent, retrospective, or economically distortionary.

The result has been a steady rise in tax-related litigation, with the courts becoming a key battleground in defining the boundaries of tax interpretation.

Against this backdrop,Guvamatanga’s argument is straightforward, litigation is slow, often unnecessary, and in many cases avoidable if parties engage early and directly.

He is also effectively asserting a degree of legal and interpretive clarity in the tax framework, particularly around currency of settlement and deductible expenses, areas where disputes have become most heated.

But while the administrative instinct behind the message is understandable, the deeper question is not whether companies should engage Treasury and ZIMRA more constructively.

It is whether they can rely on those engagements to produce consistent, fair, and predictable outcomes.

That distinction matters.

The corporate sector does not turn to the courts out of procedural stubbornness.

It does so when confidence in administrative resolution weakens,when interpretations shift, when assessments appear retrospective, or when the rules of engagement are perceived as uneven. Litigation, in this sense, is less a preference than a safeguard.

The current wave of disputes, particularly in the banking sector, illustrates this tension sharply.

The contest over the treatment of interest expenses in taxable income calculations is not merely technical, it goes to the heart of how profitability is defined, how capital is preserved, and ultimately how credit flows through the economy.

Banks argue that retrospective application of new interpretations has materially altered their tax liabilities for prior periods, raising legitimate concerns about predictability and regulatory stability.

From Treasury’s perspective, however, the counter-argument is equally firm, tax obligations must reflect the law as interpreted by the revenue authority, and where courts have largely sided with ZIMRA, the State sees validation rather than ambiguity.

This is where the policy message begins to stretch beyond its administrative intent.

Encouraging dialogue over litigation is sensible.

But discouraging recourse to courts risks being interpreted, fairly or unfairly, as an attempt to narrow the space for independent adjudication in disputes that are fundamentally legal in nature.

In any modern tax system, the judiciary is not an obstacle to efficiency; it is a critical pillar of legitimacy. Without it, even well-intentioned administrative processes risk being seen as judge, jury, and referee in the same arena.

Zimbabwe’s tax environment has evolved rapidly in response to fiscal pressures, currency shifts, and attempts to broaden the revenue base. In such an environment, clarity often struggles to keep pace with policy adaptation. That creates fertile ground for disagreement, not because corporates seek confrontation, but because interpretation becomes contested.

Treasury is correct that many disputes could, in theory, be resolved administratively.

But that requires more than exhortation. It requires a demonstrable track record of consistent interpretation, timely engagement, and outcomes that are perceived as impartial.

Without that foundation, calls to “avoid court” risk sounding less like a procedural preference and more like an attempt to manage reputational exposure in a tightening fiscal environment.

None of this is to dismiss the importance of engagement.

On the contrary, tax systems function best when dialogue is the first port of call, not the last resort.

But engagement and litigation are not mutually exclusive.

In fact, the credible threat of judicial review often strengthens administrative discipline by ensuring that interpretations are defensible beyond the confines of the revenue authority.

The deeper policy imperative, therefore, is not to shift disputes away from courts, but to reduce the number of disputes that reach that stage in the first place. That can only be achieved through stability in tax interpretation, transparency in assessments, and consistent application of the law across sectors and time periods.

Zimbabwe’s fiscal authorities are right to worry about escalating litigation. It signals friction in the system.

But corporates are also right to seek legal certainty when material financial outcomes are at stake.

The challenge, then, is not choosing between engagement and litigation. It is rebuilding enough trust in the former so that the latter becomes the exception, not the default.

Until that balance is achieved, Treasury’s advice may make administrative sense, but it will remain only partially persuasive in practice.